Several new initiatives have been undertaken by the Government of India under the leadership of Prime Minister Shri Narendra Modi, to make development participative and inclusive, in line with the core governance philosophy of ‘Sabka Saath Sabka Vikaas’. As part of the above, the Ministry of Textiles, under the leadership of Hon’ble Minister of State for Textiles (I/C), Shri Santosh Kumar Gangwar, has initiated several measures for promotion of the textiles industry in general and in assisting the youth, women and disadvantaged segments of the society in particular. A sector-wise overview of the same is given below.
1. Handicrafts Sector
The Government of India has revised handicrafts schemes and formulated a new strategy, which has four broad components:
Various initiatives have been taken by the Ministry of Textiles for promotion and development of handicrafts sector, in line with the above strategy. Major thrust was given to result- oriented Focused Implementation of various programmes such as:
2. Handlooms Sector
A number of steps have been taken by the Government for revival of handloom sector, giving particular stress on increasing the earning of handloom weavers, which would in turn attract the younger generation to this profession. These steps have been taken in light of the new strategy for revival of handlooms; the major pillars of the new strategy are the following:
Following are the major interventions taken in light of the above.
3. Powerloom Sector
|
Year |
Target |
No. of Project Approved |
Fund allotted |
Fund Utilization |
|
2014-15 |
20 |
71 |
17.00 |
16.40 |
|
2015-16 |
8 |
27 |
20.07 |
15.91 |
|
Year |
Target (No. of looms) |
Achievement |
Fund allotted (Rs. in crore) |
GOI Share released (Rs. in crore) |
|
2014-15 |
8303 |
8531 |
12.48 |
9.98 |
|
2015-16 |
30433 |
33242 |
36.55 |
34.18 |
4. Silk Sector
During financial year 2014-15, the Central Wool Development Board, Jodhpur (CWDB) has implemented different schemes for development of Wool Sector and scheme-wise following achievements were made:
Industry oriented Training programmes:
Emphasis on employment generation:
Robust monitoring Mechanism through e- initiatives:
During 2014-‘15, Tamil Nadu, Manipur, Mizoram, Odisha, West Bengal, Tripura, Haryana, Goa, Telangana, Karnataka, Gujarat, Rajasthan and Madhya Pradesh have been sanctioned projects under ISDS. During 2015-‘16, Punjab has been sanctioned project under ISDS.
A National Workshop on Integrated Skill Development Scheme was held by the Ministry, in August 2015, to share best practices, gather feedback and improve the implementation of the scheme.
A landmark initiative under NERTPS for construction of Apparel and Garment manufacturing Centres in the NE States was launched in 2014, with the announcement of Hon’ble Prime Minister on 1st December 2014 in Nagaland. The objective of the scheme is to promote employment in the NE States and encourage entrepreneurship especially amongst women, in the area of garmenting which has a huge potential both within the country and abroad.
Accordingly, foundation stone have been laid by Hon’ble Textiles Minister, for Apparel and Garment Making Centres in each of the seven states in the North Eastern Region. Work on the centres has commenced and is nearing completion in some states.
Each Apparel and Garment Making Centre set up under the initiative is estimated to generate direct employment for 1,200 people.
Each state will have one centre with three units, each having 100 machines. For local entrepreneurs with requisite background, required facilities to start a unit will be provided in ‘plug and play’ mode. Once such entrepreneurs get established, they can set up their own units, allowing the facility to be provided to new entrepreneurs.
The project will be fully funded by the Ministry of Textiles, with an estimated expense of Rs. 18.18 crores for each state. The initiative comes under the North East Region Textile Promotion Scheme (NERTPS) of the Ministry of Textiles. NERTPS is an umbrella scheme for the development of various segments of textiles, i.e. silk, handlooms, handicrafts and apparels & garments. The scheme has a total outlay of Rs. 1038.10 crore in the 12th Five Year Plan.
Besides this, a scheme to promote Geotechnical Textiles in North East Region has been launched by the Textiles Minister in Imphal on 24th March, 2015. Two sericulture schemes - Phase II of Sericulture Project for Valley Districts of Manipur and Integrated Sericulture Development Project for Hill Districts of Manipur – were also launched by the Textiles Minister on the same day in Imphal. The Minister also laid the foundation stone for a powerloom estate in Imphal West on the occasion.
SOURCE: PIB
The Central government’s proposal of making zero liquid discharge system mandatory for textile units having waste water discharge more than 25 kld (kilo litres a day) will hit some of the textile processing parks in the State. The Centre had issued a draft notification in this regard recently and sought views from the industry. Several processing units in the State have gone in for either common effluent treatment plants or individual effluent treatment plants with zero liquid discharge systems. However, the owners say the cost of implementing zero liquid discharge systems was high. In an effort to bring down the cost of processing and effluent treatment, the Southern India Mills’ Association has proposed two processing parks – one at Cuddalore and the other at Ramanathapuram – with marine discharge system. It has already invested about Rs. 75 crore to create common infrastructure and effluent treatment systems at Cuddalore. If the Centre makes the zero liquid discharge (ZLD) system mandatory, the entire project at Cuddalore will be hit. The cost for setting up evaporators is huge and hence, the ZLD is viable for units making value added products, says a representative of the association.
In a memorandum submitted to the Tamil Nadu Pollution Control Board, the SIMA Textile Processing Centre urged the board to take up the issue with the Central Pollution Control Board so that marine discharge systems are accepted. The technology and equipment for ZLD requires huge space, investment and recurring cost and the small and medium-scale enterprises find it difficult to operate the plants. “Sudden change from present standards of discharging of waste water to 100 per cent recycling will not only affect the performance of the industry but also limit its growth in the global trade,” according to the Confederation of Indian Textile Industry. The textile industry has expressed its willingness to work with the governments to evolve an acceptable solution that will benefit the industry and also ensure that the environmental standards are maintained, said Naishadh Parikh, chairman of the confederation.
SOURCE: The Hindu
An Indian textile company has agreed to pay a penalty of $100,000 (or Rs 66 lakhs) to settle charges of using pirated software that gave it competitive advantages over American businesses. Headquartered in Madhya Pradesh's Indore, Pratibha Syntex Ltd exports cloths to top American companies including Walmart. As per the settlement reached, which was filed in Los Angeles Superior Court and has been approved by a judge, the textile company has agreed to pay USD 100,000 in restitution within 30 days. "Pratibha Syntex engaged in illegal business practices that placed California garment companies at a disadvantage, while hurting American software companies' ability to develop new and innovative products," California Attorney General Kamala Harris said. "Businesses around the globe should be on notice that the state of California will hold them accountable for stealing intellectual property to unfairly undercut their competition," she said. The case assumes significance as this is first time that a state government has secured a legally enforceable judgement against an international company for such violations.
In 2013, Harris sued Pratibha Syntex on the basis that it did not pay licensing fees for software it relied on for its business, including products manufactured by Adobe, Microsoft, and others, giving the company a significant cost advantage in the low-margin business of apparel manufacturing, shipment and sales. Harris alleged that Pratibha Syntex gained an unfair competitive advantage over American-based companies by using pirated software in the production of clothing imported and sold in California. Other terms of the landmark settlement prohibit Pratibha Syntex from using unlicensed software or reproducing any part of a copyrighted software program without the permission of the legitimate copyright holder, and further require the company to perform four complete audits of the software on their computers and fix any violations within 45 days, a media release said.
In addition, Pratibha Syntex must draft an information technology policy statement regarding the use of licensed software and distribute this policy to all employees, it said. In her complaint Harris alleged that Pratibha Syntex obtained an unfair advantage because they were able to redirect money saved by using pirated software to hire employees and invest in research and development efforts. "Our software is a key differentiator in the business operations of the fashion industry. Companies using software without paying for it should not be rewarded with lower costs, especially when this comes at the expense of hardworking American companies," said Shahin Kohan, president of AIMS360, which designs and develops powerful and state-of-the-art software solutions for apparel manufacturers, wholesalers, and importers. "This landmark settlement will allow us to continue innovating and help our customers grow their businesses and create new jobs," Kohan said.
SOURCE: The Economic Times
Pursuant to exercise of right for conversion of warrants into equity shares, BK Birla Group controlled Century Textiles & Industries Limited has allotted the balance 1,01,80,000 equity shares of face value of Rs 10 each fully paid-up to two Aditya Birla Group firms, according to the information provided by the company to the BSE. Aditya Marketing & Manufacturing Limited was allotted 41 lakh shares while another 60.8 lakh shares were allotted to IGH Holdings Private Limited, the BSE filing said. Both these companies are clubbed under promoter group companies whose holding has now increased to 50.21 per cent from 45.22 per cent. In May 2015, Century Textiles had issued 18.65 million warrants without disclosing names of the companies. Subsequently in October, Kumar Mangalam Birla was named vice chairman of Century Textiles.
SOURCE: Fibre2fashion
The government's purchases of cotton are set to plunge 89 per cent in the 2015/16 marketing year as local prices have jumped after crop failures forced neighbouring Pakistan to raise imports from the world's biggest producer of the fibre. The increase in shipments to Pakistan, Bangladesh and Vietnam will help India trim spending on cotton buys by nearly Rs 14,000 crore ($2 billion) in the year that started on October 1, although the rise in volumes on the international market will cap recent gains in global prices. "Prices have moved above the MSP (minimum support price) level in most states and farmers are selling to private players," said BK Mishra, chairman and managing director of the state-run Cotton Corporation of India (CCI).
In a scheme to assist India's cotton farmers, the CCI buys raw cotton fibre from them at Rs 4,100 per 100 kg, while in spot markets prices have risen to Rs 4,300 to Rs 4,800. In the year to September 30, India spent Rs 16,000 crore to buy 8.7 million bales at the MSP as top consumer China started slashing imports. In the current marketing year, the government purchases were again expected to rise to last year's level due to poor demand from China. But a sudden increase in demand from Pakistan and a decision by India's top producing state Gujarat to buy from farmers at levels higher than the MSP boosted prices and reduced the need for state support. The government will likely spend just Rs 2,000 crore for procurement of 1 million bales this year, Mishra said. "We have bought 700,000 bales so far, but henceforth we are expecting a slowdown in purchases due to rising prices." Spot prices of ginned cotton in India have risen nearly 5 per cent in a month to Rs 33,200 per candy of 356 kg. "Demand is healthy for Indian cotton from Pakistan and other Asian countries," said Dhiren Sheth, president of the Cotton Association of India, adding that prices could stabilize around the current level. "India has so far contracted 3.6 million bales for exports, including nearly 2 million bales to Pakistan," Sheth said.
Pakistan's overall cotton imports are seen climbing to at least 4 million bales in the year that started on August 1, from 1.2 million bales in the previous year due to an estimated 25 per cent drop in its own production. India's cotton exports in the 2015/16 season are expected to rise 18 per cent to 6.8 million bales. A drop in India's production due to a pest attack and the first back-to-back drought in nearly three decades has also been supporting prices, said Pradeep Jain, a ginner based in Jalgaon in the western state of Maharashtra. A government body has estimated a 4 per cent drop in India's production in the current year. Traders are estimating a much steeper drop after floods hit cotton growing in the southern state of Tamil Nadu earlier this month.
SOURCE: The Economic Times
We had imported certain machinery under Export Promotion Capital Goods (EPCG) Authorisation. We could not export in our name to maintain even annual average exports. We did some job work for a merchant exporter (who supplied the necessary raw material and other inputs) and manufactured goods using the machines imported under the EPCG Authorisation, which were exported by him. So far as specific export obligation (EO) is concerned, the EPCG number and date have been mentioned on shipping bills representing exports by the merchant exporter, but in most of the shipping bills for maintaining annual average EO, EPCG number and date or the name of manufacturer are not mentioned. We can prove our exports through third party from our account books and documents as well as of the merchant exporter. Under the circumstances, what are the chances for redemption of EPCG Authorisation? It may be noted that both annual average and specific EO are fulfilled through third party exports.
For counting exports made through a third party, whether for maintaining annual average exports or towards specific EO, the conditions stipulated in Para 5.10 of the Handbook of Procedures, Vol. 1 must be fulfilled. One of the conditions is that the shipping bills must contain the name of the authorisation holder and supporting manufacturer, if any, and the EPCG authorisation number. Therefore, your best recourse is to approach the Policy Relaxation Committee and seek regularisation on the basis of the supporting documents.
We need to export our product as a sample free of cost, the value of which is $1,000. As per Regulation 4 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, it can be made without furnishing the declaration required under Regulation 3 of the said Regulation. The limit for free sample as stated under Regulation 4 (d) has been increased to $25,000 through RBI Notification No.FEMA.116/2004-RB dated March 25, 2004. Customs has also issued Circular No. 53/2004-Cus dated October 13, 2004 to clarify the above matter. Now at the time of export, Customs demand GR waiver from bank. Please clarify whether we need to get the GR Waiver certificate from an authorised dealer (AD-I) Bank, even though the value of free sample is below $25,000. We also want to know whether this limit of $25,000 is for the whole financial year.
Exemption filing declaration and free of cost supplies are different. For freely exportable trade samples, supplied free of payment, declaration is exempted (Regulation 4(a)). For goods of value up to $25,000, declaration is exempted for every shipment (Regulation 4 (d)), but you have to realise and repatriate export proceeds. The bank’s grant of waiver of declaration applies for export of goods free of cost, for export promotion up to two per cent of the average annual exports during the preceding three financial years, subject to a ceiling of Rs 5 lakhs. For status holder the limit is two per cent of the annual average realisation during the preceding three financial years, or Rs10 lakhs, whichever is less.
SOURCE: The Business Standard
At a time when the auto sector is slowly finding its feet again, recent decisions on pollution control by governments and courts have put a spoke in the wheel. Union Road Transport and Highways Minister Nitin Gadkari spoke to Bloomberg TV India on the way forward. Excerpts:
There have been a number of political, judicial and tribunal interventions in the last few weeks that have suddenly confused the automobile sector. Investors and companies have to grapple with multiple changes in a matter of a few days. What is the situation right now?
We need an integrated approach for all the problems. There is no doubt that the automobile sector contributes significantly to exports, creating more employment and paying taxes to the government. But at the same time, for the development of this sector, we have to think about problems like pollution. The world is changing and now pollution is a really big problem. We are facing a lot of problems due to pollution in Delhi. So this is the time for us to think in the direction that we should encourage the automobile sector to take up new technology, inventions, innovations that will increase our exports, employment potential and increase profits for the sector. At the same time, we have to decrease pollution. I feel that there is no confusion. The decision of the National Green Tribunal is very important. We must understand that in the past as well, when there was pollution in Delhi, the situation improved for which the credit goes to the Supreme Court. So the approach of my Ministry today is that we are ready to support the automobile industry for new changes and inventions, but at the same time we have to accept the norms of Euro V and Euro VI.
We have to change some parts of this sector to achieve the goal as far as pollution is concerned. It is not a difficult task but we need to change the mindset towards a vision for that. It is now time for the automobile sector to think about pollution and make innovation and changes. They can mobilise technology for bio-diesel, ethanol and bio-CNG. The world is changing so we should take an integrated approach.
Many people find the Delhi government's odd-even scheme very odd. And this is a political intervention where suddenly somebody has decided to alter things to such an extent.
The Delhi pollution and traffic jam problem is a different problem. If the State government is taking the initiative in the interest of Delhi, I do not want to criticise them. Let us try and make it work. The main solution here is addressing the traffic jam in Delhi. There are some jam spots that we have identified. Within three months we will start work to decongest those. By improving the traffic jam spots I think we can give tremendous relief to the people of Delhi. Simultaneously, we are constructing an easterly-westerly bypass, that is an easterly peripheral road and westerly peripheral road and it is 143 km from our side. With this, 50 per cent of the traffic in Delhi can be reduced. Along with that, we are extending the metro rail system from Dhaula Kuan to Manesar. This is a 70-km extension. Work on that will start in the next two months. Then the NHAI has also finalised a plan. There are eight roads connected to the ring road, which will be transformed into elevated roads. Doing this will also reduce the traffic jam and pollution in Delhi. Turning to fuel use, we can also use bio-diesel. I have agreed to give Delhi 10 lakh litres of bio-diesel. It will be pollution free and its cost will be Rs. 2-3 less per litre. So it is cost effective, pollution free, and an import substitute.
There are other new initiatives we are taking. For example in Nagpur, we are starting buses running 100 per cent on ethanol. We will take a decision within this month to add 50 more buses that will run on ethanol. Bihar and UP have got tremendous capacity for ethanol. So if we can transfer our transport from diesel to ethanol it will also serve as a big boost for farmers in Bihar and UP. We can also make ethanol from molasses, sugar cane juice, corn and now technology is available where we can make ethanol from biomass and municipal waste. Here's another solution. We can get methane from the sewage in Delhi and from that we can produce bio-CNG. We can run 1,000 buses in Delhi on bio-CNG. This is the way we can solve the problem. The Municipal Corporation of Delhi, the Delhi Jal Nigam Board and the Central government are all interested in initiating new ways to reduce pollution. My department is ready to give all the cooperation that the agencies concerned need.
What is the future of diesel engines in a country like India? You have brought the forward BS norms but 90 per cent of the population is still using the older emission standard. What is the future now? India didn’t even have a proper policy response to the Volkswagen issue.
Even in the shipping sector we have decided to shift it to LNG. I am not an expert on this but LNG is the future. There is less pollution compared to diesel. A big problem is the pollution caused by power generator sets run on diesel. We can make generator sets based on ethanol. We also have to find out the other reasons that have led to increased pollution. The departments concerned should address the problems and they are supposed to take action on it. This is the time when clean and pollution-free India should be a priority. As of now, the transport department does not have much expertise on this. So we have already taken a decision to form a department for this in the Transport Ministry. This department will have a full-fledged Secretary and a full secretariat. It will also have some international consultants who are experts in the automobile sector. We will take their advice and based on this we will have to bring this sector up to the international standards. We will have to adopt to international standards.
Do you feel that the diesel ban for engines over 2000 cc could be extended to other parts of India as well?
Even if the government approaches this with a compromising attitude, the court will not listen to us. If the court delivers a decision we will have to accept it. We need to fully understand the damages pollution is causing. The gases emitted like carbon monoxide, are hazardous for people. In Paris, our Prime Minister has already given a commitment that we will reduce pollution. So this is the time for us to act appropriately on addressing the pollution problem.
SOURCE: The Hindu Business Line
Malacca is eyeing textile investments from India, says Chief Minister Datuk Seri Idris Haron. "I want to revive textile investments in the state because made-in-Malaysia textiles could raise our country's profile," he told reporters after the state government's monthly assembly at Seri Negeri. Last year, the state attracted investments worth RM4.4 billion including RM1.8 billion in foreign investments, and this year aims to draw RM5 billion in total investments, he said. On another matter, Idris said the state government plans to upgrade the buildings on Jalan Hang Tuah here to international standard. "I have requested the Public Works Department to conduct safety tests on Hang Tuah Mall where some of the walls are covered in water," he said, adding the street will also host the 30-storey Yayasan Melaka building. – Bernama, December 28, 2015.
SOURCE: The Malaysian Insider
The once-vibrant Ghanaian textile industry is at a cross-road due to pirated textiles smuggled into the country despite the government’s constant efforts to stop piracy in the country. It’s impacting the operations of textile companies as cheap pirated textiles make original textile designs manufactured in Ghana relatively expensive. There were about 20 textile companies which employed about 25,000 in the 1980s. But currently there is a remnant of just four textile companies employing fewer than 2,000 people, battling to stay in business amid a myriad of challenges. According to the Managing Director of Ghana Textile Prints (GTP) Kofi Boateng, the problem is so large that despite government setting up an anti-piracy task force, the efforts are not having any meaningful impact, though the government have scared a few people. Their designs, labels and copyrights are being imitated by some people from the Far East. They then print and bring them back onto the Ghanaian market. In order to survive and compete well, they will now have to employ more young but experienced creative people so that they can have thousands of designs and colours on a monthly basis.
Even surviving companies Akosombo Textile Limited (ATL), Tex Style Ghana Limited (GTP), Printex and Ghana Textile Manufacturing Company (GTMC) are struggling in the face of competition from cheap, pirated imports. The Association of Ghana Industries (AGI) has said it is not against the importation of fabrics so far as they are not fake in terms of design, brand-name and other characteristics. John Kwesi Amoah, Assistant Manager Brand Protection ATL, noted that they are not saying that government should ban people from importing textiles. They want fair competition; people should come with their own design and brand. The task force team since its establishment in 2010 has undertaken many different destruction exercises, the textile designs were seized during operations by the task force at various outlets across the country, a total 6,000 pieces of Ghanaian-designed fake textiles destroyed. The illegal business has led to the retrenchment of many textile workers, while some local manufacturers were forced to diversify their businesses.
SOURCE: Yarns&Fibres
The government is considering different options to support the dwindling textile exports, but this is not enough, the textile sector wants the government to make decisions quickly, All Pakistan Textile Mills Association (APTMA) Chairman Tariq Saud said on Monday. “We have urged the finance minister and other officials in recent meetings to announce the textile package immediately. Whatever the incentives it can offer, it should offer now,” said Saud while speaking to The Express Tribune. APTMA, arguably the most powerful business lobby in the country, is continuously pushing the government to announce different incentives for the textile industry to make it competitive in the region. Last week, it urged the government to immediately extend the Drawback of Local Taxes and Levies scheme to the entire textile value chain and offer export refinance facility to the spinning and weaving sub-sectors. It also demanded that the government introduce safeguards through tariff and non-tariff measures against inroads of synthetic yarns and fabrics into the domestic market, and provide incentives for exports by matching the regional support package. “We believe the government will accept many of our demands, because something has to be done to stop the declining textile exports,” Saud said.
Textile exports of the country remained under pressure in the first five months (July-Nov) of the current fiscal year. They dropped to $5.2 billion in July-November, down 8.4% from $5.7 billion in the same period last year, according to the Pakistan Bureau of Statistics (PBS). Arif Habib Limited analyst Ahmed Lakhani concurred that the government would announce some incentive. “The challenge for the government is that it has to pacify textile exporters by giving them some incentives, while it simultaneously juggles the revenue target.”
SOURCE: The Tribune
Nigerian companies Synergy Cotton and Agro Allied have started a campaign along with farmers in Kano to revive the cotton value chain in the country in collaboration with a UK based firm, according to Nigerian media reports. Dr. Adebayo Jimoh, chairman, Synergy Cotton and Agro Allied, said in a seminar that they will be replicating the value addition programme in Kano, which was successful in Uganda, Mozambique, and Malawi, in order to revive cotton and create more jobs. The cotton production in the country has decreased which could lead to shutting down of textile industries and unemployment said Nick Earlam, chairman, Plexus Cotton. He emphasised that the private enterprises, development agencies, and the government need to work together to reach the production target of 100,000 metric tonnes of cotton in the coming two years. The campaign will use technology and provide incentives to farmers to add value to the crop and boost the production.
SOURCE: Fibre2fashion
Saudi Arabia on Monday said this year’s budget deficit amounted to $98 billion (367 billion riyals) as lower oil prices cut into the government’s main source of revenue, prompting the kingdom to scale back spending for the coming year and hike up petrol prices. A royal decree announced that petrol prices would go up by 50 percent effective Tuesday. Even with that jump, Saudis will pay just 24 cents (0.90 riyals) for a liter of 95 octane gasoline, less than a dollar per gallon. The Saudi-based Jadwa Investment estimates the government spends around $61 billion on energy subsidies annually, almost $11 billion of that on gasoline alone. For two consecutive years the kingdom has posted a deficit, and it is planning for another budget shortfall next year, projected at $87 billion (326 billion riyals). The deficits represent a sharp turnaround from just a few years ago, before oil prices tumbled in mid-2014. Instead of cutting oil production to drive prices up, Saudi Arabia has aggressively kept its production levels high in what analysts say is an attempt to keep its market share and stymie the reach of U.S. shale producers in the global market.
The Saudi government has been digging into its large foreign reserves, built up during years of higher oil prices. To cover the difference between its spending and revenue over the past year, Saudi Arabia has drawn its reserves down from $728 billion at the end of last year to around $640 billion. The Saudi fiscal budget is being watched closely by investors to see how the kingdom plans to consolidate after years of heavy spending when oil prices were more than double what they are now. Benchmark U.S. crude was trading Monday at $37.46 per barrel on the New York Mercantile Exchange.
One area where the government is not cutting back is defense and security, where it allocated $57 billion (213 billion riyals) for 2016. Saudi Arabia has been leading a coalition against Shiite Houthi rebels in Yemen since March and is a member of the U.S.-led coalition battling the Islamic State group in Syria and Iraq. The government said it is anticipating $137 billion (513 billion riyals) in revenue for the coming year, around $26 billion (95 billion riyals) less than the total for 2015. As is typical for the published version of the budget, it did not include a projected oil price. Next year’s budget suggests Saudi Arabia is basing its revenue on an even lower price of $40 a barrel for export crude, if production remains at 10.2 million barrels per day, said Fahad Alturki, chief economist and head of research at Saudi-based Jadwa Investment. That’s less than the $56 per barrel priced into the projected 2015 budget.
In the 2015 budget, oil revenues accounted for 72 percent of total revenue as opposed to 87 percent in 2014. Coinciding with that drop, non-oil revenues rose by almost $10 billion from 2014. Saudi Arabia and its Arab Gulf neighbors have been working to diversify their economies and decrease their dependence on oil, and to support the private sector to absorb the millions of young people coming into the workforce. Saudi Arabia says it expects to spend $224 billion (840 billion riyals) in 2016, which is $5 billion (20 billion riyals) less than what had been projected for this year. However, the government has also put aside $49 billion (183 billion riyals) in discretionary spending to use on infrastructure projects if oil prices improve. Nearly half of this year’s spending, or around $120 billion (450 billion riyals), went to wages, salaries and allowances. The budget revealed that the kingdom spent $30 billion more in 2015 than it had initially planned, reaching $260 billion (975 billion riyals) in total expenditures largely because of financial handouts King Salman doled out to the public when he ascended the throne earlier this year. ”There hasn’t been any major overspending, which shows the government’s determination to rationalize spending,” Alturki said. ”I think it’s a positive signal.”
The London-based research consultancy Capital Economics said in a report issued this month that the Saudi budget takes on additional prominence because it is the first under the new monarch. The budget is also being heavily scrutinized as it was prepared under the guidance of a newly-formed Council of Economic and Development Affairs, which is headed by the king’s 30-year-old son, Deputy Crown Prince and Defense Minister Mohammed bin Salman. This is not the first time for Saudi Arabia and other oil-producing Gulf countries to run budget deficits. When oil prices steeply dropped in 1986, Saudi Arabia ran a budget deficit for some 15 years, significantly increasing public and external debt until oil prices finally recovered in the 2000s.
SOURCE: The Financial Express
Crude prices fell three per cent on Monday, with Brent back near 11-year lows and trading lower to US crude, pressured by weak Japanese consumption of oil and renewed worries about oversupply. US gasoline also fell about three per cent, while heating oil slid one per cent, as the selloff extended to refined products on the New York petroleum futures complex. "Much of Monday's selling is being led by the crude benchmarks that are, in turn, responding to some disappointing Japanese industrial production guidance," said Jim Ritterbusch at Chicago-based oil markets consultancy Ritterbusch & Associates. Japan's total oil product sales in November fell to a 46-year low, data showed. In Europe, demand growth for oil products turned negative in October, analysts at JBC Energy said in a report, citing figures from the Joint Organisations Data Initiative - the first year-on-year decline this year, JBC said. But thin trading volumes ahead of the year-end holidays and jitters about colder weather forecasts also could prevent new lows in crude for now, Ritterbusch said. "Downside price response will likely be limited by updated weekend forecasts for some colder northeast temperatures through about the first third of January," he said. US crude's West Texas Intermediate (WTI) futures fell $1.23 to $36.87.
Figures from the Organization of the Petroleum Exporting Countries (Opec's) imply a glut of more than 2 million barrels per day, equal to more than two per cent of world demand. Oversupply is expected to persist into the earlier part of next year. "The global supply and demand tables are still showing a heavy picture for the first half of 2016," said Olivier Jakob, oil analyst at Petromatrix. Crude futures have plunged nearly 70 per cent from highs above $100 a barrel in June 2014 after Opec, led by top exporter Saudi Arabia, dropped its longstanding policy of cutting output to support prices in favour of defending market share. While the collapse has partly achieved Opec's goals by curbing growth of competing supplies, it has put finances in producing nations under more strain, even in the relatively wealthy Gulf states. Saudi Arabia on Monday announced plans to shrink a record state budget deficit with spending cuts and a drive to raise revenues from sources other than oil.
SOURCE: The Business Standard
Silicon Valley athletic apparel startup Kleen Fabrics says it has created the “world’s most technologically advanced line of active wear" through a partnership with a textile innovator that uses silver in its thread. PurThread Technologies CEO Lisa Grimes equates the deal for her Cary, N.C.-based company, which develops antimicrobial fibers and yarns, to winning “a contest.” “They were evaluating a bunch of technologies,” she says, attributing PurThread’s win to the fact that its technology lasts as long as the garment. “They really just wanted something that people could work out in and not wind up having odors.” And the Kleen deal, which puts the technology in all Kleen garments, is just the latest chapter. She teases that other deals are in the works – but, due to non-disclosure agreements, she can’t talk about them.
At the heart of the technology is a silver-embedded yarn, shown to kill 99.99 percent of salmonella and other surface bacteria within two hours of contact in a recent University of Arizona study. Initially developed for hospital curtains and scrubs, the technology is powered by Kodak technology – yes, the company known for camera film. Eastman Kodak had been researching antimicrobial solutions to protect film. PurThread contacted Kodak after seeing the EPA registration on the antimicrobial, thinking the silver chemistry it uses could be embedded into textiles. The two companies formalized their partnership in 2013. In Kleen’s case, the PurThread technology is intended to protect against odor and bacteria in its patented Kleen Silver line of activewear. PurThread’s other partners include Greensboro, N.C.-based textile giant Burlington. The company has 10 employees and has raised more than $7 million in venture financing.
SOURCE: The Bizjournals
The yuan closed at a four-year low after a slump in Chinese equities reignited concern capital will flow out when the economy is still showing few signs of a solid recovery. The Shanghai Composite Index fell 2.6 percent in its biggest loss since Nov. 27 as emerging-market stocks halted a two-week rally. China recommenced initial public share offerings this month after banning new sales in June amid a rout that wiped $5 trillion from the value of local equities. A report over the weekend showed that while a contraction in industrial profits slowed, they have fallen for six straight months. “Apart from the correction in the stock market, liquidity is quite thin at this point on a global market basis," said Suan Teck Kin, an economist at United Overseas Bank Ltd. in Singapore. “Some dollar buying could push up the greenback." The yuan’s spot rate in Shanghai closed down 0.18 percent at 6.4880 a dollar, the lowest level since May 2011, according to China Foreign Exchange Trade System prices. The People’s Bank of China cut its daily reference rate, which restricts onshore moves to a maximum 2 percent on either side, by 0.06 percent to 6.4750. The offshore yuan reversed an earlier gain to trade 0.18 percent weaker at 6.5542 a dollar as of 5:45 p.m. in Hong Kong, according to data compiled by Bloomberg. It has declined 5.2 percent this year, more than the 4.3 percent drop in the Shanghai rate.
Yuan trading in Shanghai will be extended to 11:30 p.m. local time from Jan. 4, compared with the current close of 4:30 p.m., the PBOC said in a statement last week. Overseas institutions with significant volumes will also be allowed to trade in the onshore foreign-exchange market. The decline in industrial profits slowed to 1.4 percent in November, from 4.6 percent the previous month, according to figures issued on Sunday. The PBOC has cut interest rates six times since November 2014 and lowered bank reserve-requirement ratios to boost an economy headed for the slowest annual growth in a quarter century. The nation’s “activity growth” will improve as the central bank’s easing measures kick in, Goldman Sachs Group Inc. economists led by Maggie Wei wrote in a note.
SOURCE: The Bloomberg
